I need not remind anyone here about FCC Chairman Kevin Martin’s ongoing “war on cable.” Even if you hate the cable industry or capitalism in general, there’s just no way I can see how anyone who believes in the rule of law and good government can support Martin’s incessant abuse of power in his Moby Dick-like crusade against the cable industry. A crusade, incidentally, which happens to be motivated by Chairman Ahab’s desire to control speech on cable television, as I’ll note below.

Anyway, the latest chapter in this miserable saga of government-gone-mad is Martin’s recent effort to begin a far-ranging data gathering effort concerning cable prices and analog-to-digital channel movements under the guise of individual complaint enforcement. In a new paper entitled “Der Undue Prozess at the FCC: Part Deux,” my PFF colleague Barbara Esbin shows, once again, how the FCC’s regular processes and procedures are being perverted by Martin to achieve ends not within the agency’s delegated authority. And the results, in this case, will be profoundly anti-consumer.

Esbin documents the four flaws in the FCC’s investigation as follows:

(1) the FCC has very limited authority to regulate cable rate levels; (2) to the extent lack of advance notice of channel moves is at issue, local franchising authorities (LFAs), not the FCC, are statutorily empowered to carry out enforcement activities; (3) the FCC has no rules either prohibiting cable operators from migrating cable programming channels from analog to digital transmission or requiring corresponding per-channel rate reductions; and (4) to the extent the FCC is required by Congress to collect data on the multichannel video programming distributor (MVPD) market and cable pricing generally, the agency is directed to do so by means of its annual video competition and price survey reports. Thus, not only is the digital cable probe being conducted in a manner that calls into question the fundamental fairness of agency processes (with guilt virtually presumed), it seems to be pursuing goals hard to fathom. What the cable industry is doing in migrating its legacy analog cable services to digital transmission is unambiguously pro-consumer, and the FCC’s probe will undoubtedly slow its progress. It is difficult to conceive of how consumers will benefit from this diversion of public and private resources as the nation approaches the critical switch-over from analog to digital television broadcasting just three short months from now. The public interest would be better served if the FCC would “stick to its knitting” and faithfully carry out its statutory mission. No more, and certainly no less.

Esbin goes on to note that, sadly, “this scenario is getting to be all too familiar: the FCC’s regular processes and procedures appear to have been perverted to achieve ends not within the agency’s delegated authority.” Of course, it’s obvious to anyone who has followed this war between Martin and the cable industry what this latest fiasco is really all about. Esbin explains:

So what is the agency really after? One of the first to report on the probe, Amy Schatz, identified its purpose as: “FCC Opens Investigation Into Cable-TV Pricing.” According to Todd Shields, Chairman Martin has said: “Listen, if I can think of anything that’ll help lower prices for cable customers, I would move forward on it.” But by seeking information concerning negotiated fees from wholesale programming suppliers, one suspects yet another back-door attempt to regulate such wholesale prices with an eye toward accomplishing the FCC Chairman’s cable Holy Grail: a la carte programming offerings.

I’ve discussed a la carte regulation ad nauseum here, so I will you spare you another rant. But let’s not forget what really motivates that crusade: Martin’s desire to “clean up” content on cable and satellite TV. A lot of “consumer advocates” are getting taken for a ride by Martin and his claim that he’s out to be Mr. Consumer Advocate and get our cable rates down. (Nevermind asking what the hell a Republican FCC Chairman is doing playing up price controls and getting in bed with the far left regulatory crowd). The fact is, this war has always been about speech control, not cable rates. The “consumer advocates” are just convenient pawns in a back-door censorship power grab.

Anyway, Esbin powerfully concludes here analysis with a summation of everything that is wrong with the way that Martin has conducted himself in this matter, and others:

What is disturbing is the process the FCC’s Chairman is using to pursue what might otherwise be a perfectly legitimate inquiry into a range of industry-wide practices in connection with the migration towards all-digital operations. This is no ordinary FCC enforcement action and it is difficult to conceive of how this use of agency resources will further two of the FCC’s most pressing current goals: ensuring a smooth transition to digital television transmission and encouraging the speedy deployment of ever higher-speed broadband Internet services. In fact, the probe is more likely to slow progress on each front as enormous resources are diverted to producing and reviewing information relevant mostly to activities that lie outside the scope of the FCC’s regulatory jurisdiction. More importantly, consumers cannot possibly benefit, in the long run, when the government conducts its business using questionable procedures in a manner that strongly suggests a lack of impartiality, fairness and predictability, because there can be no confidence that the results of such actions will be fair and reasonable. If the cause of this government investigation is just, its outcomes can only gain, not lose, by scrupulous adherence to the rule of law.

Amen. Hopefully the next FCC Chairman learns that lesson and behaves themselves appropriately.

When the definitive history of Kevin Martin’s regulatory reign of terror against the cable industry is finally written, I have a feeling that Ted Hearn of Multichannel News will be the man who pens it. There is no one who has been reporting on these issues longer or with more investigative vigor than Ted. In an absolutely scathing piece today about a former Martin staffer, Ted does a nice job summarizing the major elements of Martin’s war on cable. It reads like the list of grievances against King George found in the Declaration. (Think: “He has erected a multitude of New Offices, and sent hither swarms of Officers to harrass our people, and eat out their substance.”)  Anyway, I just thought I’d throw Ted’s list up here for those keeping score at home:

— He secretly rewrote an FCC study issued in November 2004 that had concluded that cable a la carte was a bad idea. — He walked away from a handshake agreement with NCTA, Comcast and Time Warner that the rollout of family programming packages would end his a la carte jihad. — He stripped cable’s control over critical wiring in apartment buildings, affirming the identical policy that a court had previously struck down. — He voided exclusive contracts between cable operators and apartment building owners just a few years after the FCC gave the green light to such deals. — He required cable operators to carry must carry TV stations in analog and digital for three years after voting against such a policy in February 2005. — He extended program access rules for five years, a gift to DirecTV and Dish Network even though the two satellite providers are larger than every cable company in the U.S. except Comcast and Time Warner. — He imposed expensive set-top box equipment mandates on cable, making it vastly more costly for Comcast and Time Warner to reach the goal of all-digital platforms. — He capped cable ownership at 30% of pay-TV subscribers nationally—the same limit that a federal court kicked back to the FCC as unlawful—while letting AT&T and Verizon basically divide the country’s phone market. — He slashed cable leased access rates to zero in an act of bureaucratic malice that a federal appeals court has now blocked and that the Office of Management and Budget has rejected as a violation of the Paperwork Reduction Act. — He decided to brand Comcast an Internet outlaw when all the company did was occasionally frustrate a tiny minority of customers whose massive consumption of Web porn and pirated Hollywood films was destroying the service for others.

As I mentioned yesterday, James Gattuso and I penned an editorial for National Review this week about the growth of FCC regulation and spending in recent years. In the op-ed, we also noted that, “For whatever reason, a disproportionate number of these [new regulatory proposals] have been aimed at cable television, so much so that press and industry analysts now speak of Chairman Martin’s ongoing ‘war on cable.'”

Today, the editors at National Review have chimed in with an editorial of their own on the issue entitled, “Pulling the Cable on Martin’s Crusade.” Specifically, the editors address what most pundits believe really motivates the Chairman’s crusade against cable: His desire to force cable companies to offer consumers channels on “a la carte” basis in an effort to “clean up” cable TV. “Martin should abandon this particular crusade,” the NR editors argue. “While we are sympathetic to parents’ desire to get the channels they want without having to buy access to racier fare, using economic regulation to restructure an industry is the wrong approach.” They continue:

For TV programmers, the practice of bundling channels together works well. Religious and minority-oriented channels can piggyback on the popularity of the sports and news channels. This is why the Faith and Family Broadcasting Coalition, a group of the nation’s leading religious broadcasters, opposes efforts to impose à la carte programming. Not enough consumers who currently subscribe to the basic-cable bundle would buy religious programming under an à la carte model. All channels thus benefit from the bundling model, which allows them to access households that might not otherwise be interested in their programming. For this reason, TV programmers have signed contracts with cable companies that prohibit à la carte sales. Forcing the cable companies to ignore these agreements would amount to a wholesale overwriting of private contractual arrangements. Supporters of à la carte have failed to demonstrate a need for such dirigisme. If consumer demand for à la carte options is sufficiently strong, there is no structural impediment to the market’s satisfaction of it. Some social conservatives argue that parents should be able to buy the Disney Channel without having to let MTV’s 24-hour sleaze-a-thon into their homes. But parents who wish to shield their children from immoral influences are not without options. They can monitor their children’s viewing, block channels, or forgo cable (or television) altogether. We realize that the existence of these options falls short of a comprehensive solution to the difficulties of raising children in a culture that sometimes seems hostile to the enterprise. But the answer is not a mandate that would trample private contract rights and drive religious programming off the air. Nevertheless, Kevin Martin has pressed forward in his attempts either to force the cable companies to adopt an à la carte model or to scare them into doing so. At Tuesday’s meeting he tried to use an arcane provision of federal communications law to declare the cable market uncompetitive and subject to more FCC regulation. This would arguably give the FCC power to impose à la carte pricing, though it would be challenged in court. But even without that authority, the FCC would still have more power to make the cable companies miserable until they acceded to Martin’s demands. Fortunately, a majority of his fellow commissioners saw things differently and scuttled the plan. But Martin has signaled that he intends to persist. He does not seem to grasp that the government cannot just pick and choose, à la carte, which private contracts it intends to honor.

This gets it exactly right, and it closely tracks the argument I set forth originally in my PFF paper, “Moral and Philosophical Aspects of the Debate over A La Carte Regulation.”

With the release last month of its report on Violent Television Programming and Its Impact on Children, the FCC teed up the issue of regulating televised violence and tossed it over to Congress with a recommendation that lawmakers go ahead and swing for the fences. And Congress appears ready to oblige, although not necessarily in the way some at the FCC had originally envisioned.

You will recall that FCC Chairman Kevin Martin used the FCC’s violence report as another opportunity to engage in his monomaniacal, Moby Dick-like quest to impose a la carte regulation on cable and satellite operators. Martin argued that “Requiring cable and satellite television providers to offer programming in a more a la carte manner would be a more content neutral means for Congress to regulate violent programming and therefore would raise fewer constitutional issues.” But it doesn’t appear that the chairman is going to get his whale this time around.

Ted Hearn of Multichannel News reported yesterday that the bill that Sen. Jay Rockefeller (D-WV) is ready to introduce in the Senate on this front will not include language imposing a la carte regulatory regime on cable and satellite operators. For reasons that remain unclear, Sen. Rockefeller is opposed to the concept.

But that doesn’t mean that cable and satellite operators are off the hook. Overall, the new bill is expected to look a lot like a similar measure that Rockefeller floated along with Sen. Kay Bailey Hutchison (R-Texas) in the last Congress. That bill, S. 616, the “Indecent and Gratuitous and Excessively Violent Programming Control Act of 2005,” proposed a significant expansion of the FCC’s powers in terms of regulating both “indecent” and “violent” programming. So much so that when I wrote about the proposal in this 2005 PFF white paper, I concluded that it represented “the most significant congressional effort to regulate speech since the Communications Decency Act (CDA) of 1996.”

It appears that the new Senate measure will likely propose imposing a time-channeling mandate on cable and satellite operators similar to what broadcasters already face for indecent material. Under existing regulations, broadcasters have to channel such programming to the “safe harbor” hours of 10:00 p.m. and 6:00 a.m. Apparently, the new Senate bill will broaden that time-channeling mandate to include “excessively violent” programming and then extend the requirement to multichannel video distributors.

Ironically, Chairman Martin could actually be correct in assuming that a la carte regulation “would raise fewer constitutional issues” than the sort of time-channeling approach that Rockefeller and other Senators appear ready to endorse. Some scholars have noted that Congress and the FCC could try to sell the courts the notion that a la carte mandates represented pure economic regulation and, therefore, it would not raise serious constitutional / First Amendment scrutiny. That’s utter rubbish, of course, as Chairman Martin’s repeated comments about the issue have made clear. He and others argue that a la carte is the ideal regulatory instrument to “clean up” cable and satellite TV. So there are clearly some First Amendment issues at stake. (I wrote about all this in another white paper: “Moral and Philosophical Aspects of the Debate over A La Carte Regulation,”)

We may never know which argument the courts would accept about a la carte regulation if Congress doesn’t mandate it, and frankly I’m happy about that since a la carte represents one the most potentially destructive industrial policy schemes imaginable. While the courts were trying to determine its constitutionality, the wonderful diversity of programming on television could be decimated if the rules remained in effect while legal challenges were pending.

Regardless, with time channeling / safe harbor regs there’s just no way that Congress or the FCC can sell them to the courts as anything other than a direct effort to control content on television. Needless to say, proponents would have a huge constitutional challenge on their hands minutes after the bill was signed. I’d bet my house that the affected industries would seek an immediate injunction and get it. And then another long legal battle would ensue. If you want to see how that would play out, read this white paper I asked First Amendment expert Robert Corn-Revere to write for PFF two years ago: “Can Broadcast Indecency Regulations Be Extended to Cable Television and Satellite Radio?”

Bob knows a thing or two about this issue since he successfully litigated the case of United States v. Playboy Entertainment Group (2000). In that case, the Supreme Court struck down a law that required cable companies to “fully scramble” video signals transmitted over their networks if those signals included any sexually explicit content. Echoing its earlier holding in Reno v. ACLU, the Court found that less restrictive means were available to parents looking to block those signals in the home. Specifically, the Court argued that:

[T]argeted blocking [by parents] enables the government to support parental authority without affecting the First Amendment interests of speakers and willing listeners—listeners for whom, if the speech is unpopular or indecent, the privacy of their own homes may be the optimal place of receipt. Simply put, targeted blocking is less restrictive than banning, and the Government cannot ban speech if targeted blocking is a feasible and effective means of furthering its compelling interests.

More importantly, the Court held that:

It is no response that voluntary blocking requires a consumer to take action, or may be inconvenient, or may not go perfectly every time. A court should not assume a plausible, less restrictive alternative would be ineffective; and a court should not presume parents, given full information, will fail to act.

This is an extraordinarily high bar the Supreme Court has set for policymakers wishing to regulate modern media content. Not only is it clear that the Court is increasingly unlikely to allow the extension of broadcast-era content regulations to new media outlets and technologies, but it appears certain that judges will apply much stricter constitutional scrutiny to all efforts to regulate speech and media providers in the future, including broadcasting.

In sum, regulation can no longer be premised on the supposed helplessness of households to deal with content flows if families have been empowered and educated to make content determinations for themselves. That means that any legislative effort imposing time-channeling regulations on multichannel video providers is likely to be struck down as an unconstitutional violation of the First Amendment. Unfortunately, we’re probably going to be forced to endure a protracted, expensive, multi-year legal battle to get to that inevitable conclusion.

Meanwhile, back in the real world, our kids are watching video on the Internet, iPods, PlayStation Portables, DVD players, and cell phones. One wonders what Congress and the FCC think they are accomplishing when they propose “Leave It to Beaver”-era regulations like this.